Thursday, December 28, 2017

Research Shows Raising Minimum Wage Does NOT Kill Jobs

Venture Capitalist Nick Hanauer explodes the old myth that raising the minimum wage kills jobs in this op-ed for Business Insider. Here is most of what he writes:

In a first-of-its-kind report, researchers at the National Employment Law Project pore over employment data from every federal increase since the minimum wage was first established, making "simple before-and-after comparisons of job-growth trends 12 months after each minimum-wage increase."

In fact, if anything, the data suggest that increases in the federal minimum appeared to encourage job growth and hiring.

Perhaps even more striking, of the only eight times that total or industry-specific employment declined after a minimum-wage increase, the US economy was already in recession (five times), technically just emerging from recession (twice), or about to head into recession (once).

Clearly, this handful of employment downturns would be better explained by the normal business cycle than by the minimum wage.

"As those results mirror the findings of decades of more sophisticated academic research," the authors conclude, "they provide simple confirmation that opponents' perennial predictions of job losses are rooted in ideology, not evidence."

But while there is no evidence that raising the minimum wage is the "risky" "gamble" that doomsayers describe, the devastating economic costs of keeping wages too low are very well documented.

After decades of stagnant wages, 73 million Americans — nearly one quarter of our population — now live in households eligible for the Earned Income Tax Credit, a benefit exclusively available to the working poor.

And according to a 2014 report from the Organization for Economic Cooperation and Development, rising income inequality (and the reduced consumer demand that comes with it) knocked 6% to 9% off US economic growth over the previous two decades.

Wow. If the US economy were 9% bigger than it is today, it would have created about 11 million additional jobs. Imagine how great that would be for both American workers and businesses.

To be clear, I am not suggesting that there's no limit to how high we can raise the minimum wage. But minimum-wage opponents are not haggling over a number. They are not making a nuanced argument that the minimum wage might be bad for some people if it's too high or phased in too fast or if the economy is too weak to absorb the change.

No, their core claim is that the minimum wage always hurts the whole economy — that it will always reduce growth— that it is always a sure-fire "job-killer."

For decades, our minimum-wage debate has been dominated by ideology — the zero-sum claim that if wages go up, employment must inevitably go down — leading even many progressives to believe that the minimum wage is at best a necessary trade-off between fairness and growth.

But 78 years of evidence demonstrates that this old trickle-down model just isn't true. On the contrary: When workers have more money, businesses have more customers and hire more workers. That is the virtuous cycle that has always described the way market economies actually work.

So if you are genuinely worried about killing jobs, our current $7.25-an-hour minimum wage is arguably far riskier than $15.

Democratic Delegates

1991 delegates needed

-----------------

Biden - 2000*

Bloomberg - 36

Buttigieg - 20

Gabbard - 2

Klobuchar - 5

Sanders - 1059

Warren - 56

Quote

How can you frighten a man whose hunger is not only in his own cramped stomach but in the wretched bellies of his children? You can't scare him - he has known a fear beyond every other.
-John Steinbeck

Quote

About Me

Quote

What you need is sustained outrage...there's far too much unthinking respect given to authority.-Molly Ivins

Total Pageviews

Comment Policy

I invite anyone who wishes to comment on this blog to do so. I enjoy the comments, whether you agree with what I have said or not. But some people want to abuse the right to comment, and since this is my blog, I have decided to lay down the following rules. If your comment violates these rules, it will not be published.

1. Comments must not be racist, misogynistic, homophobic, or otherwise bigoted.

2. Comments must not involve little more than name-calling and insulting remarks.

3. Comments must not be made by "anonymous" or "unknown".

4. Comments must not try to sneak in some free advertising for themselves (like spam).

Belief

Quote

Religion is an insult to human dignity. With or without it, you'd have good people doing good things and evil people doing bad things, but for good people to do bad things, it takes religion.
-Steven Weinberg